British law firms are enjoying increased profits per partner and are optimistic about future commercial prospects despite the impact of Brexit and the threat of the Big Four accountancy firms, according to a recent survey. The Crowe’s Law Firm Benchmarking Survey 2018 reveals that almost 70 per cent of law firms have increased headcount whilst two thirds saw an increase in profit per equity partner (PEP). The strongest business performers are firms with a turnover up to GBP10 million and those with a turnover above GBP50 million.
However, the research found that Brexit and the Big Four were viewed as challenges for law firms. The majority still consider Brexit as a net threat to their business with only six per cent of firms viewing it as an opportunity. Meanwhile city law firms still fear the threat of non-legal firms and are particularly wary of the Big Four and the legal technology players.
Artificial Intelligence (AI)
The results also revealed that technology was making an impact across the board with AI no longer seen as the exclusive domain of the bigger firms. The majority consider the benefits of automation as helping streamline their less technical operational areas. The result envisaged is a flow of higher quality operational data that will help firms to focus on developing their core business while also remaining competitive and financially stable.
Upbeat about automation
Although only 23 per cent of regional firms think that AI will enable them to offer new services to clients in the next 2-3 years, they are, as a group, very upbeat about the use of automation in other areas. Fifty four per cent of regional firms view the automation of paralegal/straightforward legal functions as having an impact on business in the next 2-3 years. 53 per cent of City firms share this view. A similar pattern emerges for the automation of support functions, such as cashiering and accounting with nearly half believing it will have an impact on business in the next 2-3 years.
Pricing transparency is now seen as a critical key to success, say almost 80 per cent of the City firms and 72 per cent of the regional firms. However, eight per cent of regional law firms believe that the way they price their work will not significantly change in the future whist 22 per cent of City firms believe it will change significantly going forward. The Crowe survey flags up that while most firms have already made some changes to their pricing approach in recent years, the changes have been moderate - rather than transformational.